Spotlight on service charge

Spotlight on service charge

In this item we look at recent developments in the area of service charge including a case on the recovery of residential service charge for a period before the landlord acquired its interest, a case highlighting the importance of clear drafting for commercial service charge reserve funds and a reminder of the launch of the 3rd edition of the commercial service charge code.

Original news—residential service charges

Ground rents (Regisport) v Dowlen [2014] UKUT 0144 (LC)

This case involved a large bill for the supply of water to three blocks of flats. The bill, which exceeded £65,000, related to water supplied to the three blocks between June 2005 and April 2011. It built up because for many years Thames Water delivered invoices for water consumed at two of the blocks to the developer originally responsible for their construction while the landlord, which acquired the freehold of the three blocks on 1 October 2006, received invoices only for the third block.

The landlord’s managing agents, in the mistaken belief that the invoices they received related to all three blocks, apportioned those sums and collected them through the service charges payable by all 164 tenants of flats in the three blocks. The developer did not pay the invoices it received for the other two blocks, nor did it pass them on to the landlord. Both the landlord and the tenants believed all of the sums due had been paid. The mistake was eventually discovered in 2010 and since then Thames Water had sought to recover the arrears from the developer and from the landlord, which in its turn had sought to pass them on in full to its 164 tenants.

An associated company of the developer had entered into a common

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.